Manage Currencies

Defining Currencies: Points to Consider

When creating or editing currencies, consider
these points relevant to entering the currency code, date range, or
symbol for the currency.

Currency Codes

You cannot change a currency code after you
enable the currency, even if you later disable that currency.

Date Ranges

Users can enter transactions denominated in
the currency only for the dates within the specified range. If you
do not enter a start date, then the currency is valid immediately.
If you do not enter an end date, then the currency is valid indefinitely.

Symbols

Even if you enter a symbol for a currency,
the symbol is not always displayed when an amount is
displayed in this currency. Some applications use currency symbols
when displaying amounts. Others, like Oracle Fusion General Ledger,
do not.

Euro Currency
Derivation: Explained

Use the Derivation Type, Derivation Factor,
and Derivation Effective Date fields to define the relationship between
the official currency (Euro) of the European Monetary Union (EMU)
and the national currencies of EMU member states. For each EMU currency,
you define its Euro-to-EMU fixed conversion rate and the effective
starting date.

Note

If you need to use a different currency code for Euro,
you can disable the predefined Euro currency and create a new one.

Derivation Type

The Euro currency derivation type is used only for the Euro, and the Euro derived derivation type identifies national
currencies of EMU member states. All other currencies do not have
derivation types.

Derivation Factor

The derivation factor is the fixed conversion
rate by which you multiply one Euro to derive the equivalent EMU currency
amount. The Euro currency itself should not have a derivation factor.

Derivation Effective Date

The derivation effective date is the date
on which the relationship between the EMU currency and
the Euro begins.

FAQs for Manage Currencies

When do I create
or enable currencies?

Create currencies to use, for example for
reporting purposes, if they are not already provided. All currencies
from the International Organization for Standardization (ISO) 4217
standard are provided.

Enable any currency other than USD for use in Oracle
Fusion Applications, for example for displaying monetary amounts,
assigning to sets of books, entering transactions, and recording balances.
Only USD is enabled by default.

What's the difference between precision, extended
precision, and minimum accountable
unit for a currency?

Precision is the number of digits to the right
of the decimal point used in regular currency transactions. Extended
precision is the number of digits to the right of the decimal point
used in calculations for this currency, and it must be greater than
or equal to the standard precision. For example, USD would have 2
for precision because amounts are transacted as such, for example
$1.00. For calculations, for example adding USD amounts, you might
want the application to be more precise than two decimal digits, and
would enter an extended precision accordingly.

Note

Some applications use extended precision. Others,
such as Oracle Fusion General Ledger, do not.

Minimum accountable unit is the smallest denomination
for the currency. For example, for USD that would be .01 for the cent.
This unit does not necessarily correspond to the precision for all
currencies.

What's a statistical
unit currency type?

The statistical unit currency type is used
only for the Statistical (STAT) currency. The Statistical currency
is used to record statistics such as the number of items bought and
sold. Statistical balances can be used directly in financial reports,
allocation formulas, and other calculations.

Manage Conversion Rate Types

Creating Conversion
Rate Types: Critical Choices

Maintain different conversion rates between
currencies for the same period with the Oracle Fusion General Ledger
conversion rate types functionality. Four predefined daily conversion
rate types are seeded: Spot, Corporate, User, and Fixed, allowing you to use different rate types for different
business needs. During journal entry, the conversion rate is provided
automatically by the General Ledger based on the selected conversion
rate type and currency, unless the rate type is user. For user rate
types, you must enter the conversion rate. Define additional rate
types as needed. Set your most frequently used rate type as the default.
Conversion rate types cannot be deleted.

Assign conversion rate types to automatically populate
the associated rate for your period average and period end rates for
the ledger. For example, you can assign the predefined rate type Spot to populate your period average rates
and the predefined rate type Corporate to populate your period end rates. Period average and period end
rates are used in translation of account balances.

Conversion rate types are used to automatically assign
a rate when you perform the following accounting functions:

Enforce Inverse Relationships

Check the Enforce
Inverse Relationship check box to specify whether or not
to enforce the automatic calculation of inverse conversion rates when
defining daily rates.

Action

Results

Checked

When you enter a daily rate to convert currency A
to currency B, General Ledger automatically calculates the inverse
rate, currency B to A, and enters it in the adjacent column. If either
rate is changed, the application automatically recalculates the other
rate.

You can update the application calculated inverse
rate, but once you do, the related rate is updated. The check box
enforces that the inverse relationship is maintained but does not
prevent you from updating the rates.

Unchecked

General Ledger calculates the inverse rate but you
can change the rate and update the daily rates table without the corresponding
rate being updated.

Select Pivot Currencies

Select a pivot currency that is commonly used
in your currency conversions. A pivot currency is the central currency
that interacts with contra currencies. For example, you set up a daily
rate between the US dollar (USD) and the Euro currency (EUR) and another
between the USD and the Canadian dollar (CAD). USD is the pivot currency
in creating a rate between EUR and CAD. EUR and CAD are the contra
currencies. Select the pivot currency from the list of values which
contains those currencies that are enabled, effective, and not a statistical
(STAT) currency. The description of the pivot currency is populated
automatically based on the currency definition.

If you want the application to create cross rates
against a base currency, define the base currency as the pivot currency.
Selected pivot currencies can be changed in the Rate Types page.

Select Contra Currencies

Select currencies available on the list of
values as contra currencies. The available currencies are those currencies
which are enabled, effective, not STAT currency, and not the pivot
currency selected earlier. The description of the contra currency
is populated automatically based on the currency definition. Add or
delete contra currencies in the Contra Currencies region of the Rate
Types page.

Enable Cross Rates and Allow Cross Rate Overrides

Check the Enable Cross
Rates check box to calculate conversion rates based on
defined currency rate relationships. General Ledger calculates cross
rates based on your defined cross rate rules. Associate your cross
rate rules with a conversion rate type, pivot currency, and contra
currencies. Cross rates facilitate the creation of daily rates by
automatically creating the rates between contra currencies based on
their relationship to a pivot currency. If the Enable Cross Rates check box is changed to unchecked
after entering contra currencies, the application stops calculating
cross rates going forward for that particular rate type. All the earlier
calculated cross rates for that rate type remain in the database unless
you manually delete them.

For example, if you have daily rates defined for the
pivot currency, USD to the contra currency, EUR, and USD to another
contra currency, CAD, the application will automatically create the
rates between EUR to CAD and CAD to EUR. This prevents the need to
manually define the EUR to CAD and CAD to EUR rates.

Maintain Cross Rate Rules

Define or update your cross rate rules at
any time by adding or removing contra currency assignments. Add a
contra currency to a cross rate rule and run the Daily Rates Import
and Calculation program to generate the new rates. If your remove
a cross rate rule or a contra currency from a rule, any cross rates
generated previously for that contra currency remain unless you manually
delete them. Changes to the rule are not retroactive and will not
affect previously stored cross rates. The Cross Rate program generates
as many rates as possible and skips currencies where one component
of the set is missing.

Note

With a defined web service that extracts daily currency
conversion rates from external services, for example Reuters, currency
conversion rates are automatically updated for the daily rates and
all cross currency relationships.

Using Rate
Types: Examples

There are four seeded conversion rate types
in Oracle Fusion applications:

Spot

Corporate

User

Fixed

Scenario

You are the general ledger accountant for InFusion
America Inc. You are entering a journal entry to capture three transactions
that were transacted in three different foreign currencies:

Canadian dollar (CAD): A very stable
currency

Mexican Peso (MXP): A fluctuating
currency

Hong Kong dollar (HKD): An infrequently
used currency

You enter two lines with accounts and amounts for
each foreign currency transaction. Based on your company procedures,
you select the appropriate rate type to populate the rate for Corporate and Spot rate types from your daily rates table. You manually enter the current
rate for the User rate type.

Currency Selected

Rate Type Selected

Reason

CAD

Corporate

Entered a periodic type of transaction. Your company
has established a daily rate to use for the entire month across divisions
for all transactions in CAD. CAD is a stable currency that only fluctuations
slightly over the month.

MXP

Spot

Entered a periodic type of transaction. Your company
enters daily rates each day for MXP because this currency is unstable
and fluctuates.

HKD

User

Entered a one time transaction. Your company does
not maintain daily rates in HKD.

Note

Your company does not currently use the Fixed rate type. From January 1, 1999, the
conversion rate of the French franc (FRF) against the euro currency
(EUR) was set at a fixed rate of 1 EUR to 6.55957 FRF. Your French
operations were started in 2007, so you maintain all your French business
records in the EUR.